Client Alert
Recently, before awarding bondholders any amounts on account of a make-whole or other similar liquidated damage provision upon a debt prepayment, courts have repeatedly insisted on clear and unambiguous language in the credit documents requiring such payment notwithstanding a bankruptcy filling and a related automatic acceleration. In the absence of such language, bondholders have attempted to raise numerous other arguments, which have been largely unsuccessful. In a recent decision in In re Energy Future Holdings Corp., the Delaware bankruptcy court decisively rejected (and likely laid to rest) one of these arguments — that “cause” exists to lift the automatic stay to waive a default and decelerate debt following an automatic bankruptcy acceleration.

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